Effect Of Economic Uncertainty Research Articles

The Effects of Economic Uncertainty and Trade Policy Uncertainty on Industry-Specific Stock Markets Equity

The Effects of Economic Uncertainty and Trade Policy Uncertainty on Industry-Specific Stock Markets Equity

The effects of economic uncertainty on financial volatility: A comprehensive investigation

The effects of economic uncertainty on financial volatility: A comprehensive investigation

FinTech adoption and the effects of economic uncertainty on household consumption

This paper examines how the adoption of FinTech affects household consumption in the presence of economic uncertainty. We use regional-level FinTech adoption and economic uncertainty measurement, along with representative household-level consumption data, to investigate this issue. Our empirical analysis shows that while high levels of economic uncertainty lead to a shift in household consumption from services to non-durable goods, widespread adoption of FinTech overcomes this negative effect and prevents the reduction in service spending. We use the distance of a household from Hangzhou and the economic uncertainty in the United States as proxies for exogenous variation in FinTech adoption and economic uncertainty in China, respectively, and find similar results. Focusing on the transmission channel, we find that FinTech helps alleviate credit constraints, contributes to entrepreneurship and employment opportunities, and thus mitigates the negative impact of economic uncertainty on household consumption.

Economic uncertainty as a circumstance of decision making about parenthood and childbearing: researches and policies

This text deals with the effects of economic uncertainty on the decision-making about becoming a parent or extending the family with another child. The goal is to highlight the influences of these circumstances as a significant determining factor of reproductive behaviour in post-industrial societies. In research, economic uncertainty is operationalized through employment, analyzing rates and stability. Gender roles are determinants of positions in the private as well as in the public sphere and, because of that, they are considered as key framework of consideration. Literature and statistics testify to the disadvantages regarding women's employment as well as to the negative impact of economic uncertainty either through delaying or giving up parenthood and childbearing. We conclude that employment is a significant precondition for positive decisions and at the same time, the importance of certainty and stability in terms of employment is emphasized. We underline the necessity of policies which create the conditions so that childcare is not a factor that endangers women's employment or the job security of both mothers and fathers.

The effects of economic uncertainty, geopolitical risk and pandemic upheaval on gold prices

This paper tests whether gold can be used to hedge against various forms of uncertainty, using monthly data for the sample period from January 1998 through August 2020. The study presents a model featuring GED-GARCH(1,1) technique to examine gold return behavior for five regional markets: the U.S., U.K., European Union, China and India. The model relates gold returns to changes of economic policy uncertainty, changes of geopolitical risk, market volatility due to interest rate variations and equity market volatility resulting from a worsening in the pandemic while controlling for the inflation rate, stock returns, economic growth, and changes in the exchange rate. Testing of gold prices expressed in U.S. dollars, British pounds, Euros, and Chinese yuans finds evidence that gold returns respond positively to a rise in a set of uncertainty variables, suggesting that gold can be viewed as a hedge against uncertainties. However, tests of a gold return equation in Indian rupee (or USD) show that some coefficients of uncertainty variables have negative signs because gold is most likely treated as an alternative to money.

Effects of economic uncertainty and socioeconomic status on reproductive timing: A life history approach

Why do some people have children earlier compared to others who delay reproduction? Drawing from an evolutionary, life history theory perspective, we posited that reproductive timing could be influenced by economic uncertainty and childhood socioeconomic status (SES). For individuals lower in childhood SES, economic uncertainty influenced the desire to reproduce earlier compared to individuals higher in childhood SES. Furthermore, the decision regarding reproductive timing was influenced by tradeoffs between earlier reproduction or furthering one's education or career. Overall, economic uncertainty appears to shift individuals into different life history strategies as a function of childhood SES, suggesting how ecological factors and early life environment can influence fertility-related decisions at the individual level and may contribute to the highly variable fertility patterns observed across countries.

When ‘uncertainty’ becomes ‘unknown’: Influences of economic uncertainty on the shadow economy

AbstractThe literature has documented the negative impacts of economic uncertainty on output, investment and employment; however, no current study considers the influence of economic uncertainty on the informal sectors. This study investigates the effects of both the level and volatility of economic uncertainty on the shadow economy, through a global sample. Various econometrical techniques and estimation strategies are applied to panel data of 116 countries from 2002 to 2015, and show three interesting findings. First, increases in both the level and volatility of economic uncertainty are found to increase the size of the shadow economy. These effects are documented consistently over the long‐term. Second, the impact of volatility is dominant over the impact of the level of economic uncertainty in increasing the size of the shadow economy. Third, the effects of economic uncertainty in increasing the size of the shadow economy are strong in low‐ and lower‐middle‐income economies, but less so in upper‐middle‐income economies, particularly in high‐income economies.

The Effects of Economic Uncertainty on Multi-National Companies (MNCs) Investment in Malaysia

The Effects of Economic Uncertainty on Multi-National Companies (MNCs) Investment in Malaysia

Does economic uncertainty matter in international commodity futures markets?

AbstractThis paper examines whether economic uncertainty risk is significantly priced in international commodity futures markets. Contrary to the belief that commodity futures are sensitive to economic uncertainty, our results provide concrete evidence that uncertainty risk is not significantly priced. To explain these results, we examine whether financial intermediaries who are supposed to be marginal investors are not uncertainty averse. We find that the effect of economic uncertainty becomes insignificant after financialization, that is, a large inflow of financial investors, in 2004 and the relation between economic uncertainty and intermediaries' leverage ratio is insignificant. These results suggest that economic uncertainty might not be priced because it is not a significant concern of financial intermediaries.

The effect of economic uncertainty on narrow money demand and its stability in New Zealand: An empirical investigation

The main objective of this paper is to investigate whether economic uncertainty affects narrow money demand in New Zealand and whether the specified money-demand function remains stable over time. New Zealand adopted inflation-targeting in the early 1990s by discarding monetary-targeting or any other strategy of monetary policy for price stability on the grounds that instability in the narrow money-demand function might sever the relationship among money, output, prices, interest rates, and exchange rates, as the classical monetary theory suggests. This paper specifies an augmented money-demand function for an open economy that includes economic uncertainty and inflation volatility as two additional determinants of money demand. Quarterly data for New Zealand for the period 1995Q1–2017Q4 is used to determine whether these variables remain significant in an augmented money-demand function in this country. The empirical results, obtained by the autoregressive distributed lag (ARDL) approach to cointegration, suggest that there exists a cointegral relationship among variables in the specified model and that economic uncertainty negatively affects narrow money demand in New Zealand. Further, the empirical results, obtained by the non-linear ARDL (NARDL) approach, suggest that economic uncertainty affects narrow money demand asymmetrically. An increase in economic uncertainty lowers narrow money demand, while a decrease in economic uncertainty does not increase – and​ instead seems to decrease – narrow money demand. Unlike with economic uncertainty, an increase in inflation volatility, which represents inflation uncertainty, increases narrow money demand. Although it is not conclusively established in this paper, the effect of inflation uncertainty on narrow money-demand seems symmetric. The narrow money-demand function is found in this paper to have remained stable irrespective of whether the model is estimated by the ARDL or NARDL approach. This paper draws the conclusion that the abandonment of money in the formulation of monetary policy strategy, such as inflation-targeting in New Zealand, cannot be justified on the grounds of instability in the narrow money-demand function.

The effect of economic uncertainty on inventory and working capital for manufacturing firms

This paper develops an empirical model to investigate the impact of macro-economic risk on working capital and the various types of inventory. Our analysis helps manufacturing firms anticipate the implications of high macro-economic risk, measured through the economic policy uncertainty (EPU) index, on their operations. Using a sample of 6503 US manufacturing firms during the period 1990–2018, we show that EPU drives high levels of inventory, thus corroborating existing theories about random disruptions raising safety-stock levels. We also show that increased economic uncertainty yields higher trade credits, payables, and working capital, thus requiring firms to tie more capital to their operations. Our results are statistically significant, yet these effects are small at the firm level. The results are robust when applying the monetary policy uncertainty (MPU) index to the subsample of the data from 1990 to 2007, instead of the EPU index to the same data set.

Effects of Economic Uncertainty on Mental Health in the COVID-19 Pandemic Context: Social Identity Disturbance, Job Uncertainty and Psychological Well-Being Model

Psychological well-being is a major global concern receiving more scholarly attention following the 2008 Great Recession, and it becomes even more relevant in the context of COVID-19 outbreak. In this study, we investigated the impact of economic uncertainty resulting from natural disasters, epidemics, and financial crisis on individuals’ mental health. As unemployment rate exponentially increases, individuals are faced with health and economic concerns. Not all society members are affected to the same extent, and marginalized groups, such as those suffering from chronic mental illnesses or low-income families cannot afford the downsizing, mass lay-offs and lack of access to public health services. Psychiatric profession is familiarized with the phenomenon of intolerance of uncertainty (IU), and we examine how this concept is associated with job uncertainty and social identity disturbance. Several studies have formally investigated the effects of IU, but to our knowledge, this is the first research integrating the psychological well-being, job uncertainty and identity disturbance caused by economic breakdown. Literature points to many reported cases of PTSD, anxiety, depression and suicidal tendencies following major social disasters. Yet, we have undertaken to analyze the subjective experiences underlying the self-harming behaviors in an attempt to fill the methodological gap by drawing insights from prominent psychological, sociological and economic theories. We find economic uncertainty to have a positive relation to job uncertainty and identity disturbance, and a negative relationship with psychological well-being. Psychological well-being depends on coherency between both abstract subjective and concrete objective identity, and when these perceptions are inconsistent, cognitive dissonance arises resulting in identity disturbance. We argue that stability is not associated with monetary advantage only, but also with a wide range of other benefits that are crucial for individuals’ growth, satisfaction and sense of identity. Therefore, we propose the implementation of social support and public welfare policies to mitigate health risks during the turbulent socio-economic changes.

The economic sources of China's CSI 300 spot and futures volatilities before and after the 2015 stock market crisis

The 2015 Chinese stock market crisis has increased focus on the factors that determine the volatility of stock spot and futures markets. In this paper, we investigate the economic sources of CSI 300 spot and futures volatilities before and after the stock market crash based on the generalized autoregressive conditional heteroskedasticity model with the mixed frequency data sampling scheme (GARCH-MIDAS). It shows that the risks of the CSI 300 Index tend to increase with higher inflation, lower economic growth, tighter credit conditions and more variant credit policies, while the risks of CSI 300 futures tend to increase with higher inflation, tighter credit conditions, more variant inflation rates and more variant credit policies. The effects of economic fundamentals are greater and more prolonged than the effects of economic uncertainty and speculative trading. Investors are advised to pay attention to the changes in price levels, economic development and credit policies when managing their portfolio risks. More importantly, as speculation has contributed little to the risks of CSI 300 futures in the post-crisis period, regulators are advised to ease trading restrictions and resume index futures trading gradually.

The Effect of Economic Uncertainty on the Housing Market Cycle

Executive Summary. We examine the spillover effect of economic uncertainty on the duration probability of housing market booms, busts, and normal times in 12 OECD countries. Quarterly data from 1985 to 2012 were used. Based on a discrete-time duration (hazard) model, we find that the probability of exiting housing market busts increases with higher economic uncertainty in a statistically significant fashion. Uncertainty, however, is not found to influence the likelihood of leaving booms and normal times. Our results suggest that housing serves as a possible hedge against uncertainty.

ECONOMIC POLICY UNCERTAINTY EFFECTS ON CREDIT AND STABILITY OF FINANCIAL INSTITUTIONS

ABSTRACTWe examine policy‐related economic uncertainty effects on the availability of credit, non‐performing loans and loan loss provisions using a panel of 18 countries. We provide significant evidence that uncertainty reduces the availability of credit while leading to increases in banks' non‐performing loans and loan loss provisions, distorting sectoral stability. Our findings are economically meaningful.

Does Aggregate Economic Uncertainty Predict the Volatility of Financial Assets?

We investigate the effects of economic uncertainty on the return volatility of financial assets, including equities, bonds, foreign exchange and commodities. We use several popular measures of economic uncertainty, and find the uncertainty displays significant but heterogeneous effect on financial volatility. Economic uncertainty constructed in a data rich environment shows strong effects for most financial assets. In particular, the first principal component of the economic uncertainty measures provides a good balance of the effects. The effects of economic uncertainty on financial volatility appear to be closely related to the state of the economy and are more pronounced around recession periods. Furthermore, our out-of-sample analysis shows that investors can use economic uncertainty to predict financial volatility, from both the statistical and economic perspectives.

Impact of economic uncertainty in a small open economy: the case of Chile

ABSTRACTWe construct the first news-based economic uncertainty index for Chile, which allowed us to rebuild 23 years of the history of economic uncertainty in the country and quantify its impact on the economy. We find that an increase in economic uncertainty conveys a fall in GDP, investment, and employment, even after accounting for the small open economy nature of Chile. In contrast to previous studies for big and developed economies, we do not find evidence of an overshooting effect when uncertainty dissipates; therefore, increases in economic uncertainty have negative effects on the economy, even in the long-run. Our estimates suggest that these impacts range from 10% to 20% for aggregate investment, 2.5% to 5% for GDP, and 1.3% to 4.2% for employment. Extensions suggest that economic uncertainty affects both mining and non-mining investment, with the former showing a more pronounced decline. We also find that the bulk of effect of economic uncertainty on aggregate investment is via private investment, with some short-run impacts on public investment. Moreover, compared to the GDP response, aggregate consumption responds in almost the same way to an economic uncertainty shock.

Эффекты экономической неопределенности: влияние на основные показатели финансовой составляющей научной и инновационной деятельности

Эффекты экономической неопределенности: влияние на основные показатели финансовой составляющей научной и инновационной деятельности